Midwest Economy Continued to Improve in January: Survey

Results from a monthly survey of business supply managers released Feb. 1 suggest economic conditions continue to improve in nine Midwest and Plains states, and that confidence in the regional economy is at its highest level in six years.

The Mid-America Business Conditions Index report said the overall economic index for the region rose to 54.7 in January from 53.1 in December and 46.5 in November. It’s the highest figure since February 2015.

“This is the third consecutive month the index has increased, and (it) points to an improving regional manufacturing economy,” said Creighton University economist Ernie Goss, who oversees the survey. “I expect this to generate even healthier growth for both manufacturing and nonmanufacturing for the first half of 2017.”

The survey results are compiled into a collection of indexes ranging from zero to 100. Survey organizers say any score above 50 suggests growth, while a score below indicates decline. The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

Looking ahead six months, economic optimism rose to 69.5 in January from 63.3 in December. It’s the highest confidence reading recorded in six years, Goss said.

The January employment index soared to its highest level since August 2014, hitting 57.0, compared with December’s 50.9. Goss said the key to regional job growth in the first half of 2017 will be improvements in agriculture and energy commodity prices.

The prices-paid index jumped to 74.2 from 70.4 in December, reflecting rising inflationary pressures at the wholesale level.

“This is the highest wholesale inflation gauge that we have recorded since April 2014,” Goss said.

The Bureau of Labor Statistics releases its consumer price index on Feb. 15. Goss said if the overall reading continues to move higher, he expects the Federal Reserve to increase short-term interest rates in the first quarter of this year.